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CVA advice on an online chat

21st April, 2019
Robert Moore

Written ByRobert Moore

Marketing Manager


+447584583884

Rob has over a decade of experience in web and general marketing. He has extensive knowledge of the Insolvency sector and has helped many worried directors with their questions.

Rob is now working with the Board at KSA Group Ltd to develop strategic marketing programmes to support the business plan and drive more company rescues.

Robert Moore
  • What is a CVA?
  • CVA advice through our online chat service

It can sometimes be tricky to know who to turn to, so many of our clients seek CVA advice through our online chat service. With this service, an expert is only a few clicks away and is always ready to help you figure out your next steps.

We’ll start off with a quick recap on what a CVA is. Then, we’ll show you how our advisor, Keith, recently helped a client by giving expert CVA advice through our online chat service.

What is a CVA?

A CVA or Company Voluntary Arrangement is a contract between an insolvent company and its creditors. However, it is only available to companies that are viable.

It allows the insolvent company to pay back debts, or at least a proportion of them, over an agreed period. It also prevents costly or more serious legal proceedings, such as winding up petitions and compulsory liquidation, from taking place.

The terms are proposed by the company with support and advice from a licensed insolvency practitioner (IP). This proposal must then be approved by the creditors at their meeting.

More than 75% of creditors must vote in favour of the proposal to get a CVA passed. Usually an agreement like this arranges repayment of between 30% and 100% of the company’s debts over a period of 3-5 years.

A CVA is always worth considering, as it offers several benefits:

  • Directors keep control of the company
  • It encourages the recovery of the business
  • There is no statutory investigation of the directors
  • The return for creditors is usually much better than it is through administration or liquidation
  • It protects the company from further legal action on debts bound up in the arrangement.
  • All creditors are bound by the arrangement, even if they voted against it
  • Often, more employee jobs are saved

So, that covers the basics, but it’s always best to seek individually-tailored advice as financial situations differ from company to company.

CVA advice through our online chat service

Our experts are available to give excellent CVA advice through our online chat service, available Monday to Friday, 9am to 8pm.

This means that we’re always here to help and support worried directors who are considering a CVA. We offer unique advice tailored to your situation, so you can be sure that we’re offering the most appropriate solution for your business. Here’s a transcript from someone who recently got in touch:

Keith F Steven
Hello. How may I help you?
Good Morning

Client
In a CVA what happens if a creditor has a personal guarantee from a director and insists that this is honored even if the CVA is agreed by the other creditors

Keith F Steven
A guarantee is just that a guarantee and the guarntor needs to pay or do a deal. This is quite common especially with new forms of lending such as Funding Cicrcle
What we do is discuss this with directors and creditors. Sometimes for example 50p in £1 is paid by company and 50p in £1 by directors.
Who is the PG provided to?

Client
Travis Perkins when opening up credit terms. Not sure it it was made clear that PG was being made

Keith F Steven
Well we have tried to defeat TP directors guarantees without success . TP always force a deal or full payment. How much is owed to TP

Client
£10,000

Keith F Steven
Ok how much does the company owe to HMRC and trade creditors

Client
£1.3 m

Keith F Steven
Pk the way to fix this is to look at CVA, for the business, then look at your personal situation as a consequence of any future CVA. Do you pay yourself through PAYE or drawings or dividends?

Client
PAYE

Keith F Steven
OK good. By modifying your salary by say £15k a year then proposing a 12 month repayment to TP you would pay it back from salary. this woudl satisfy TP and help avoid any personal insolvency risk
Would you like to discuss this with our Scotland regional manager. We can arrange that free call today and then a free meeting.
At that meeting we go thorugh all options and problems. Then we make a written report back to the board including what our costs would be for the CVA an other options.

Client
I’m not looking into for myself but for one of the directors. If he paid it back through his salary can he reclaim this as a CVA creditor himself or does he ‘lose’ this money

Keith F Steven
He would be a (subrogated) creditor yes, but standard HMRC modifications to every CVA require “connected creditors claims to not survive the CVA”
thus no he wouldn’t get it back IF the HMRC vote was more than say 25% of the overall VOTES cast
https://www.companyrescue.co.uk/cva-company-voluntary-arrangement this page gives you a link to the 120 page CVA guide that covers this and all other questions your director may have.
I will give you my personal mobile, I can be reached over the weekend on 07974 086779

Client
thanks – I’ll give him a transcript of this and suggest he contacts you if he wants to discuss further unless there is someone else in your company that he should speak to

Keith F Steven
Or he can call Derek Robinson 07540 432112

thanks for the chat

Client
No – thank you – you have been very helpful

superdry logo

Superdry Maybe Looking At A CVA

Update : 15 April 2024It hits the news today that landlords of Superdry are considering a restructuring deal that would result in steep rent cuts at a large proportion of its 94 British shops. The scale of the rent cuts would be dependent on the financial performance of each site.According to City sources, the fashion retailer is not planning on any permanent closures, but landlords would have the option to terminate any leases if they were not satisfied with the terms of the deal.Superdry has been facing red for some time. Most recently there were talks with founder, Julian Dunkerton regarding a takeover, but such talks were then aborted.Sky News share more. Update : 29 January 2024In line with other retailers Superdry has been finding trading difficult due to the cost of living crisis.  It has also been cutting back its store count. The clothing brand has 104 stores in the UK and started closing some back in July 2023.  The company also announced that it was looking at costs savings of some £40m.  This is an increase from the £35m they announced recently.  There are now rumours circulating that the company is looking at a Company Voluntary Arrangement (CVA) as a way of cutting costs.The CVA is a powerful rescue tool that is particularly favoured by retailers due to is ability to allow companies to vacate properties and determine their lease obligations.  The cost of high rent shops on long leases can be a heavy burden on retailers.The following case law has been used for some years now to terminate leases with no cash cost to the company.Re: Doorbar v Alltime Securities Ltd (1995) BCC 1149 stated that landlords can be bound by voluntary arrangements for future obligations under a lease.Re: Cancol Ltd (1995) BCC 1133 that the word ‘creditor’ in r1.17(1) IR 86 was wide enough to include a landlord with a right to future rent i.e. the ability to include future rent extends to CVAs as well as Individual Voluntary Arrangements.Furthermore, where the unliquidated or unascertained claim in a CVA involves future rents accruing to a landlord, the case of Re Park Air Services [1996] BCC 556) gives the CVA meeting   chairman some considerable guidance as to quantifying the claim at the meeting.Another reason that Superdry is finding itself in difficulty is that it rapidly expanded to try and become a global super brand.  No doubt much of this expanision was fueled by cheap debt and as many companies are now finding out when interest rates rise and customers pull back the going gets very tough.  As such the shares have lost almost 90% of their value in the last 12 monthsSky News has reported that PWC are the advisors that are looking at restructuring options.It is quite standard practice to put out stories about a possible CVA as this does prepare the ground for negotiations with landlords.  They will be asking the landlords for substantial rent reductions in order for them to survive.  If landlords refuse then they can usually get other suppliers and trade creditors to support a CVA proposal and out vote them.Landlords have tried to challenge CVAs in the courts on the grounds that they unfairly prejudice their position but have so far failed to succeed. 

Read
Superdry Maybe Looking At A CVA

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